Is now a good time to refinance your mortgage? If you bought a rental property in the last few years, you may be watching mortgage rates and waiting for the next best opportunity to refinance. But how does the process work, how much does it cost, and when should you pull the trigger? Today’s guest will tell you everything you need to know!
Welcome back to the Real Estate Rookie podcast! Last time we spoke with Danielle Daly, she had just bought her very first rental property. Since then, she has added two more properties, used the house hacking strategy to “live for free,” and just recently refinanced one of her mortgages. In this episode, she walks us through her thought process and how she determined that now was the right time to lock in a lower rate.
But that’s not all. Danielle also shares the two biggest lessons she’s learned to date, her go-to tools and systems for self-managing rental properties, and why she’s pivoting to another investing strategy in 2026!
Ashley Kehr:
Today’s guest was on the show before, but what’s happened since then is where the real lessons are because buying the deal is one thing, refinancing it in this market, that’s a whole different game.
Tony Robinson:
So if you’ve ever wondered what actually happens after the episode ends, after the Instagram posts, this is the behind the scenes of how a real estate investor navigates a refinance in today’s lending environment.
Ashley Kehr:
This is The Real Estate Rookie Podcast. I’m Ashley Care.
Tony Robinson:
And I’m Tony J. Robinson, and today we’re welcoming back Danielle Daly. She’s previously been on our show talking about her investing journey, and now she’s back to catch us up on what’s changed. And we’re going to go deep on a refinance you just completed. Danielle, welcome back to the show. You are now a two-timer on the Rookie Podcast. Happy to have you back.
Danielle Daly:
Hello. I feel honored. Not sure how I got here, but second time’s the charm. Thanks for having me.
Ashley Kehr:
You’ve also been on the BP rookie panel at BPCon several times too also. So a familiar face to the rookies. But for anyone who didn’t catch your first episode, give us the 60 second overview of who you are and kind of what you’ve been working on since we last spoke.
Danielle Daly:
Yeah, 60 seconds. Oh man, I will do my best. Well, hello everyone who I do not know. My name’s Danielle Daly. I currently work at BiggerPockets on the advertising sales team, and I’m also an investor. So last time, if you saw me on the Brookie podcast, I had just bought my first property. I am now on property number three. So since then, I’ve been maintaining co-living strategies and I’m also living in my house on my own. So my first two properties are now fully rentals, but really been working on getting a property per year since we last spoke.
Ashley Kehr:
So the first two properties were house hacks. And this third property, you’re not house hacking.
Danielle Daly:
So I’m sort of house hacking. I’m actually renting out to my brother right now. Oh,
Tony Robinson:
That’s the easiest house hack.
Danielle Daly:
Yeah, it’s the easiest house hack, but I did go into this without wanting to house hack. And then he decided to move, so it worked out great. But I just hit a point where I think I’m kind of not wanting to have roommates anymore. Go back really quick. That’s the shift in strategy.
Ashley Kehr:
Besides the house hacking element, have you done any kind of short-term rental, long-term rental, or has it just been the co-living, having roommates in the extra bedrooms?
Danielle Daly:
Yeah, so I’ve only done co-living right now. So it’s long-term strategy, co-living. I’m looking at leases anywhere between six and 12 months. I am considering diving into midterm rentals as the market does sort of shift, which I’m sure we’ll dive into during this episode. But yeah, I’ve only done long-term as of right now.
Tony Robinson:
As your portfolio, it’s kind of shifted and grown, Danielle. I guess is your … Well, you actually just kind of hit on that. Hold on. Let me see. There’s a different question that I wanted to ask too. Oh, I think you hit actually both of those. Actually, let me ask one follow-up question. So now that you’ve turned your first two properties into true investment deals, give us the quick numbers. What was it doing when you lived there and what are both of those properties doing now in terms of cash flow?
Danielle Daly:
Yeah, so when I was living there, I’ll just go each property in time. So the first property, I was making about 250 bucks a month. So it was pretty minuscule, but I also lived for free. So that was my first house act, lived there, rented out the rest of the rooms. And then my second property between having now two at that point, living in the second house hack, renting out the rooms, I was breaking even. So between both properties, still paying nothing, there was no cash flow, but I was not paying anything to live. So the first two properties.
Ashley Kehr:
What would you have had to pay if you were renting a room very similar? And if you rented your room to yourself, how much were you saving in rent?
Danielle Daly:
There’s two ways to look at that. If I was going to go rent a room in someone else’s house hack, call it about 900 on average in the Denver Metro. If I was going to go get an apartment, that’s a different story. That could be upwards of 2,500 to have a one bedroom apartment within Denver. So big range, obviously, but definitely saving at least, call it eight to 900 a month at the low end if I was renting just a room and a house.
Ashley Kehr:
And you’re making $250 cashflow and you’re building equity in a property that is appreciating and your tenants are paying down the mortgage.
Danielle Daly:
Exactly. Yeah, it is a no-brainer. Absolutely. It was an amazing thing to do. It’s gotten me to where I’m at today.
Ashley Kehr:
What has been one of the biggest lessons that you’ve kind of learned through this experience that you’ve done so far in your investing journey?
Danielle Daly:
It’s a great question. I think there’s a couple of different lessons. The first one is you should have reserves. I am all for being a little bit risky. It’s just me. I don’t have a family yet, so I’m all for it. However, I think I got lucky with my first property where the entire year nothing went wrong. Literally nothing. I think I maybe called a plumber once in the first year. So I’m like, oh, real estate’s easy. This is great. I’m making 250 bucks a month living in this property, living for free. This is awesome. I think that reality hit me when I got the second property. So the second property, love it. It’s a great property, so this is not a complaint. However, the things that went wrong were almost funny, for lack of a better word. I was like, “This is crazy. This is like a movie.” I had a couple flooded bedrooms that happened in that house due to, that was a whole other story in itself.
Had a lot of plumbing issues, had to get a new AC unit, ended up having to get an entire HVAC unit for one of the houses. It was just thing after thing that popped up. So it made me realize, wow, okay, I need to have reserves. And the reason that is a huge learning lesson is when I got to the third property, my TTI, my debt to income ratio was actually a little bit too high. So I was not even able to get a loan for that HVAC system that was quite expensive. So I would’ve been in a little bit of a tough spot if I did not have reserves to be able to pay that in full. So definitely have reserves. And then the second thing is I have to remind myself, and for all of you listening, definitely keep this in mind. This is the long game.
We’re playing a long game here. This is, for me, houses that I plan to hold for the next at least 30 years. So I have to remind myself when expenses like CapEx do pop up that, okay, we’re in it for the long game. This is part of the expense of owning a home. This is just part of the process that if I can just hold on, I will be completely set for retirement with just these three properties. So those are my two learning lessons.
Tony Robinson:
Danielle, you talk about reserves. How much do you feel is maybe a baseline? And then Ashley, maybe even a question for you too, how much is too much? Because I also think you can get to a point where you’ve got too much sitting in reserves if you just always continue to collect that. So how did you set a threshold for yourself, Danielle, on what the minimal amount of reserves are that you want for a property?
Danielle Daly:
That’s such a good question, Ashley. I definitely want to hear from you after in terms of the too much because Tony, just as a quick side note, I really love that you asked that because I’m actually diving into just setting myself up in terms of investing outside of real estate, making sure I’m diversified. So as I’ve gone down that rabbit hole, I realize if you have money sitting there, it’s wasting away due to inflation. I don’t want it just sitting in my account. So for me, I’m trying to figure out how much do I need for real estate versus how much do I want to allocate to other investments and potentially more real estate? So for me, that number is about 10,000 per property. Let’s say 15,000 per property if you really want to be a little bit more risk averse, but I would say at least 10,000.
So for me, 30K, having it cash, liquid or in a high yield savings, something that I could just pull out very easily so that I have it in case something like that pops up because I don’t think something crazy would pop up in all three houses at the same time, but you also never know. So that’s my number, Ashley. I would actually love to hear what you think is too much.
Ashley Kehr:
Yeah, and mine fluctuates. Oh, we’re going to buy a house. Okay, let’s pull money out of reserves and let’s use it to buy the house and then we’re going to pay it back when we finance. And so it’s constant money management and moving, but base lane is between 30 and 50,000 I keep in a savings account. I would say it probably never drops below that 30,000. And I have about, I think I’m at 20 properties now, but also small. Single family homes are 1,100 square feet. So my roof replacement costs, my HVAC replacement costs are not as large as, what are you buying? Four, five bedroom homes. In Denver. Yeah, in Denver. So my CapEx expenses are way lower per a property. But one thing that I also do is I have $200,000 line of credit. So I also keep my line of credit for if I ever needed to pull off of it.
So when I do the no-no and pull money out of my reserves to pay for the down payment on a new property or something like that, I have my line of credit still, but then I work to replenish my reserves. But I used to think that I needed a lot more, but I’m definitely not as conservative as I used to be kind of knowing in my head, okay, not all of my HVAC systems are going to need to be replaced at this single moment in time. So I definitely am not as conservative as I used to be too, but I think that having the line of credit as kind of a backup has really helped me with that too. But as a rookie, I recommend being super, super conservative. And I also have other income streams that I can pull from if I needed to put cash in.
But I’m also keeping my, besides my savings, just my actual property accounts, I usually leave a pretty healthy amount of cash just sitting in those two that just from the cashflow building up in there too.
Tony Robinson:
Yeah. For me, it’s slightly different, right? I mean, because A, we have a lot of different partnerships that kind of infiltrate our business. So I can’t have just like one large bucket. So we actually do have a separate reserves account for every single property. And the goal for us, again, it depends on the property. For our bigger properties, we try and get closer to maybe like six months of reserves. And then on the smaller property, I have tiny homes that are less than 400 square feet that were built in 2022. I’m not super concerned about having a lot of money in reserves for those. So maybe it’s three months of reserves for those properties, but we do have our separated out by property. And the reason that we … It’s a little trickier for me is because if property A has an issue, I can’t necessarily tap into the reserves for property B because they’re two separate partnerships, right?
So we really do have to make sure that each individual property is funded appropriately.
Ashley Kehr:
We’re going to take a quick break, but when we come back, we are going to cover Danielle’s refinance and what you need to know if you’re planning to do one two. We’ll be right back. Okay. Welcome back. So Danielle, let’s start. Why did you even decide to refinance your property in the first place?
Danielle Daly:
Well, I’ve been wanting to refinance at least one of my properties since buying all of them. I unfortunately. I missed the wave of the 2020 through 2021 crazy interest rate era. So unfortunately, all of my properties-
Tony Robinson:
And Danielle, I don’t want to pour salt on the wound, but Ash, what’s your lowest interest rate right now?
Ashley Kehr:
I didn’t buy anything when interest rates were low and I didn’t refinance. So my lowest interest rate is I think a 4.25.
Tony Robinson:
Got it. My lowest right now is a 2.65%.
Danielle Daly:
Oh my gosh.
Ashley Kehr:
So every time you do bring this up on an episode, Tony, it is-
Tony Robinson:
I’m pouring salt on your wound too.
Ashley Kehr:
Yeah. Affecting me too.
Danielle Daly:
I don’t want to pour salt in the wound, but I’m going to do it anyway. Go ahead. That is half of mine. My lowest is, what is it right now? I think it’s actually 5.1, so it’s pretty good. But my second property is a 6.6. And then my third property that I bought was a 7.1. I say was because that is the one I decided to refinance. Rates basically got down to, I mean, they’re around six right now, but they were down to 6.2, 6.3- ish when I went to refinance. And I have a really great lender who helps me watch rates and he actually reached out and said, “Hey, this could be a good time to look at doing a refinance.” So decided to move forward with it. And we’ll get into the numbers, I’m sure, but it just was something for me to reduce my monthly mortgage because that’s what I care about, is having the lowest expenses possible over the long term.
Tony Robinson:
And as of this recording, I just saw this news earlier this week, but rates dropped below 6% for the first time in I think three years. And I just pulled it up right now and the 30 year fix is at 5.98%. So we’re just under six, but I think six was like, and just based on from people who are much smarter than me, what a lot of folks are saying is that there’s this psychological barrier at six. And once we get below six and that number swaps from a six to a five, that starts to change the buyer psychology and hopefully we’ll get more people coming back into the market and kind of building up the real estate industry again. But with that, as more buyers come in, SASE does maybe the competition and we put some more upward pressure on prices. So I’m really curious to see how rates and supply and buyers kind of play out for the rest of this year because five, we haven’t been here in so long it feels like.
So yeah, we’ll see what happens.
Danielle Daly:
Yeah. And even that’s a great point too, Tony. On that note, there’s also, I think for rookie investors, we’re just getting started who have their first or second properties, you want to figure out one, how much reserves do you have on hand? How much is your income? How much money do you have to be able to spend on a refinance because it does cost money. So for me, we ran the numbers. It was a pretty low cost. I’m in a position where I have the extra cash, and so I wasn’t going to sit here trying to time the market. I kind of had a feeling we would get below a six at some point this year, but I also knew I can always refinance again. That’s number one. Technically, you’re supposed to wait six months, but some lenders will work with you. You could just do it again.
But two, it was a low cost for me because of a few different factors, which we can dive into, but it was a low cost. So for me to have savings for my mortgage moving forward, it was worth it to me, but I think it’s more of a personal thing at that point of someone trying to wait and time the market versus being okay with the savings that they could lock in now.
Ashley Kehr:
Now, Danielle, the thing I think of is refinancing is like, oh my God, all the closing costs I have to pay again, the fees, the commitment fee, all of these things. Can you break down before we actually get into the loan amount and things like that as to what were the fees like for the refinance process and how did you decide that it would be worth it to go ahead and refinance?
Danielle Daly:
Yeah. So the closing costs, I should have had them pulled up right in front of me, but they roughly ballparking it, there were roughly about 8,000 for closing costs. So it’s pretty similar to closing a normal loan when you do a refinance. The lender I work with, because I’ve consistently worked with him on all three properties, he offers a little bit of a discount, so it’s typically in credits. So it was I think roughly maybe like 2,500. Do not quote me on these numbers in terms of the discount that I got towards those closing costs.
Ashley Kehr:
No, we’re going to fact check you at the end of this episode. Please supply the document. We’ll never know. Even if they’re way off, we’ll never know.
Danielle Daly:
Totally be off here. But yeah, between his credit and then another thing is the timing that I closed on the loan. It was earlier this year back in, I think it was January, late December, early January. Because of that timing, I actually didn’t pay. You basically skip a month that you have to pay for your mortgage. And so my mortgage was at the time already at roughly 3,400. So that’s another 3,400 towards closing costs that I basically, you pay it over the course of the loan, but considering as our mindset should be as an investor, I don’t really care about an additional payment towards the end of the loan because I expect tenants to be paying that off. So that was also part of the savings, so to speak, of what I didn’t need to pay. And then I might be missing something there, but whatever it was, it basically came down to me paying a couple thousand dollars for the refinance out of pocket.
So it wasn’t really a huge cost to me. And then I end up saving about $250 a month on my mortgage. So if you do the back of the napkin math on that, that’s taking you, what, a couple of years, I think, to get back to pay off basically what you paid for the refinance.
Ashley Kehr:
Yeah, probably even less.
Danielle Daly:
Yeah, even less than that. For me, in the position that I’m currently in, that was worth it. For me to lock something in, to know I can always refinance again, but to spend a minimal amount for me to be able to lock in a lower rate, especially considering I also have a 2-1 buydown to complicate things even further, that was worth it to me. For some people, it might not be at that point in time. It wasn’t a super reduced rate. It went from a 7.1 to a 6.6. So it’s something, but for me it made sense at this point in time.
Tony Robinson:
Danielle, were you able to wrap any of those closing costs into the actual loan itself?
Danielle Daly:
That’s a great question. Actually, I’m not 100% sure.
Ashley Kehr:
Well, I guess, did you take more? We could kind of get into that piece, Tony, as to if she took more. I guess the way to answer that is, did you write a check at closing?
Tony Robinson:
Yes.
Ashley Kehr:
Okay.
Tony Robinson:
Because I refinanced my primary residence when rates got super low. I think when we bought our house, this was in 2018, we’re at like a 4.7 or something, a 4.8 or something like that when we bought. And when rates got super low, we refinanced, we got down to a three. And I just looked it up while you were talking through your numbers and our total closing costs were 11 grand, but we had zero out of pocket cost for that and it just got rolled into the new loan. So we were able to refinance without actually spending anything out of pocket on this deal. And every lender is slightly different on how they allow you to do that, but that was the benefit for us.
Ashley Kehr:
I have a question because I’ve never refinanced a property that had escrow. So is your escrow money rolled over to the new loan or is part of that closing cost you prepaying for another year of insurance and property taxes?
Tony Robinson:
That is a good question. And I’m looking it up here.
Ashley Kehr:
I don’t consider that really a closing cost because you’re going to pay that anyway. So that would even reduce the amount of fees that you’re paying.
Tony Robinson:
Yeah. So that was actually separate, right? So I did have to prepay some of the insurance and property taxes, but that 11,000, that was the appraisal, the origination fee, which was the majority of that, and then all the other escrow fees.
Ashley Kehr:
What was the origination fee on that?
Tony Robinson:
It was 8,800.
Ashley Kehr:
Oh my God, wow. My small local bank charges like $1,000.
Tony Robinson:
That’s crazy. And then I had another 500 for the appraisal and then another $1,800 in escrow fees, but zero out of pocket.
Danielle Daly:
I wish I had that. Definitely.
Ashley Kehr:
Okay. Tony, let’s just wrap up your example real quick. So you paid that money or that money was wrapped into your loan. How did your payment change and how much were you saving each month?
Tony Robinson:
Yeah. Gosh, I would have to look up what my original principal interest and taxes payment was, but after this refinance, it was $2,900 was the principal interest taxes and insurance. Before that, we were definitely, I don’t know, I think it was like 35 maybe, 36, if I recall correctly. So it was a pretty big reduction in our actual monthly payment.
Ashley Kehr:
So you recouped that money in the same less than two years.
Tony Robinson:
Yeah. Easily, easily, easily, easily. And we locked in this 30-year fixed 3% rate.
Ashley Kehr:
Well, really, you didn’t even have to pay it out of pockets.
Tony Robinson:
Yeah. Right? So it was like a no-brainer for us.
Danielle Daly:
That’s substantial. Yeah. I wish we were in that kind of market. Unfortunately, my numbers are not as impressive.
Tony Robinson:
Different times. Different times.
Danielle Daly:
Definitely different times. Yeah.
Ashley Kehr:
Now, Danielle, let’s go over the numbers of your house. What was the purchase price, your original loan balance? What did it appraise you and what did you take actually at the refinance?
Danielle Daly:
Yeah. So my original purchase price, this was a year ago, roughly a year ago. It was December 25, or sorry, December. That was not a year ago. December 24. I originally bought it for 565,000 and it did actually appraise at the same value. It was again, only a year later. The loan amount before the refinance was 528,000 and it was 524,000 after that year, since most of it has gone to interest versus principal, most of my payments, unfortunately.
Ashley Kehr:
Which is so depressing to look at when you look.
Danielle Daly:
It’s so sad. I paid off 4,000 in principle in a year. That’s like one mortgage payment. Great. But hey, progress is progress. And I didn’t pay most of this because of my first two rentals paying more than half of this mortgage. So there’s that. For the numbers in terms of rates, the rate was initially 7.1, but I actually did have a 2-1 buydown. So the 2-1 buydown being you’re locking in that 7.1 rate, but for the first two years, you basically have a rate that is a point lower each year. So for example, year one was a 5.6 rate that I paid at that house or at this house, it was about 3,400 a month that I was paying for the mortgage. And then year two, it was structured to be a 6.6, which would’ve been about, call it almost 3,800, a little bit under that for the mortgage.
And then I would’ve been locked in for years three through 30 at that 7.1 interest rate, which would’ve been a little bit over 4,000 a month for the mortgage. So that’s what it was. I basically locked in a 6.6 rate, but because I was only halfway through the 2-1 buydown, I’m currently paying at a 5.6 rate right now.
Tony Robinson:
Oh, so they still honor the 2.1 even though you- Really? Wow.
Danielle Daly:
Yeah. So it’s kind of cool. So it worked out where I am now. Yeah, I’m right now paying about 3,500 a month, so pretty similar payment to what I was paying. Or sorry, now it’s at a 6.6 because I am in year … Or no. Yep, nope. 5.6 because they honored it and then I locked in a 6.6 for years through 30. So they’re honoring being able to stay within that 2-1 buydown.
Tony Robinson:
I was just going to say, Danielle, I actually never knew that when you refinance it, if you were on a 2-1 buydown, that the new loan would be able to honor that original buydown. I’ve never heard of that before. So I just learned something new. So for all the rookies that are listening, that’s a question to ask. If you did buy something and you’re refinancing and you’ve got some sort of buydown, ask if they can honor that going into the new loan. Because imagine if you went from a 7.1 to a 5.98, what we just saw today, and you still got that buydown, now you’re in the fours, which is crazy.
Danielle Daly:
Exactly. And that was kind of what made me want to do this, is that they still honored that because in theory, I’m in year two of the buydown at a 6.6. So if they didn’t honor that, I would just be kind of like, there wouldn’t be a huge sort of upside because I could have saved another year of money during that 2-1 buydown. But so it made sense for me, but it is worth noting I still paid a little bit out of pocket. It just in my situation made sense. And if I get the chance to do another refinance, I probably will, if it makes sense at that time.
Ashley Kehr:
With this, when you switched the loans, did you stay with the same loan company and is that part of why they honored it?
Danielle Daly:
That is another great question. No. So my lender, he was with a specific company and he actually switched companies, but he’s still someone that I love working with. So now I have a loan that is with a different provider versus my other two loans. But realistically, at first, I’m very detail oriented and sort of OCD where I’m like, I want them all at the same place. And I know that sounds like such a small minute detail.
Ashley Kehr:
No, trust me, that would be so nice. I have a couple loans with Shellpoint and their dashboard is like, “Here’s this loan, here’s this loan, here’s this loan.” I’m like, “Ugh, if only all of my loans could be. ” And then one just got sold of course to somebody else and now it’s a new dashboard and stuff.
Danielle Daly:
Business idea for whoever wants to create that, right? Some sort of consolidation platform where you could see all your loans and just access it through one platform or dashboard, that’d be great.
Tony Robinson:
Good idea.
Danielle Daly:
But yeah, no, I just have basically two different loan providers now, but it’s simple. I mean, it’s the same. The dashboard is the same. It’s just two different logins.
Ashley Kehr:
Which seems minuscule, but it actually gets annoying.
Tony Robinson:
Well, Danielle, walk us through the actual process for the refinance from the moment that you decided to, “Hey, I think I might want to refinance to actually sitting at the closing table,” what were those steps in between?
Danielle Daly:
Yeah, so it was actually very simple and it really replicates buying a house. It replicates the loan process of just a normal purchase aside from it being one a little bit more simple. Two, you just already have experience. So I already had the documentation and the paperwork ready of what was needed. And three, I was actually able to close virtually, which I would assume you might be able to do that maybe with a regular loan as well. But with this, I was able to just have a notary online and just be able to sign it and everything was done virtually. So it was much more simple, but realistically, it was a very similar process as buying a house in terms of the paperwork that’s needed. It takes a few weeks. You’re working with your lender just to kind of get what’s needed, but it was really simple.
It’s just basically providing a bunch of paperwork and making sure that you run through the numbers with your lender and you understand what you’re committing to.
Tony Robinson:
And what kind of loan was it? Was it like a traditional conventional loan or some other type of super secret refinance weapon?
Danielle Daly:
I’m not that cool yet and not that experienced. Just a conventional. This is standard conventional.
Ashley Kehr:
Was it still your primary at the time that you got to do it, refinance it as a primary or did you have to refinance it as an investment loan?
Danielle Daly:
Yeah, so this luckily is my primary.
Ashley Kehr:
Oh, okay. Okay.
Danielle Daly:
Yeah, that’s a great point just to call out is that my first two properties, if I ever want to go refinance that, those would be investment loans, or I don’t know if that’s the proper word for it, but having to be an investment loan means a little bit of a higher rate. So with my primary, that’s another reason that I felt not at all pressured, but I felt like this was the right time to do it while I lived here, just to not even worry about the market, don’t really care if interest rates go up or down. Obviously I want them to go down, but if they don’t, let me lock it in now. And that’s what I mean by not caring what happens in the future. I don’t want to time things while I’m living here, since I potentially will move again, this isn’t like my forever home necessarily.
I wanted to just be able to do it now while I had that lower rate of it being a primary.
Ashley Kehr:
And then after that, you’ve got to get a HELOC before you move. So you have the HELOC on the property.
Tony Robinson:
Hey, get all those in place.
Danielle Daly:
Yes, you mentioned that’s on my list.
Tony Robinson:
I’m actually going through a HELOC process right now on my primary and they don’t even do a true appraisal on the property, just like a virtual kind of desk appraisal where they just do a quick summation of what they think that the value is. Was it the same process for the refinance or did they actually do a full appraisal?
Danielle Daly:
So what’s interesting is originally they weren’t going to have to do an appraisal and it was, I don’t remember the exact reason, to be honest offhand. I just know my lender was like, “We’re good. We don’t have to do one. We’ll be able to get away with it, ” probably just because it was so soon that I bought the property and unfortunately that actually changed throughout the loan process. And so this is one thing worth noting. So because of the relationship I have with my lender, the appraisal would’ve cost, I think like 800 bucks or something. It’s somewhere between five and a thousand bucks to do an appraisal that I would’ve had to pay out of pocket. And my lender ended up covering that cost just because originally I was presented with not having to do an appraisal. So that would’ve been slightly frustrating to be like, “All right, hang on.
” I was told one thing, so he was great about just covering this cost for me, but we did end up needing one.
Tony Robinson:
And then what was the timeframe from start to finish to actually get the refinance done? Was it a typical 30-day timeframe or was it maybe faster because it wasn’t as involved of a loan?
Danielle Daly:
Great question. It was a little bit less. It was like three and a half weeks. So very similar to a normal timeframe faster by a few days.
Ashley Kehr:
Tony, for the HELOC, I’ve never actually gotten a HELOC on my primary residence, just investment properties, but what is the timeframe looking for that? Especially if they’re doing just a desktop appraisal, I would assume that it would be an even shorter timeline.
Tony Robinson:
I’m going to tell you right now because it’s moving pretty quickly. I want I’m going to say, and I’m looking up when I started that application with them, and I want to say that I started that maybe 10 days ago. And I’ve already got a conditional pre-approval. I’m in the final stages of underwriting where there’s action flags and final documentation, but it looks like potentially next week we should be at a point where we’re closing. So we’re talking start to finish potentially less than three weeks, which is insane. I wasn’t expecting it to move that quickly, but it is. Now, part of that I think too is that I’ve been just super on top of it. And much like you, Danielle, just being a real estate investor, you tend to have a lot of those things that they request just already dial up and saved in a foldage you can upload quickly.
So I would get an email about like, “Hey, we need this, ” and I’d have it up to them same day. So I think me really being on top of it has allowed it to move more quickly. But I mean, yeah, less than three weeks and we’re able to tap into all the equity.
Ashley Kehr:
Are you using the same bank or lender that you have your mortgage with for that property?
Tony Robinson:
No.
Ashley Kehr:
I didn’t know maybe because they already have a lot of the information.
Tony Robinson:
No. Yeah. It’s my bank where I have my car loans with them and they’re just a super easy to use credit union and I just call them. I was like, “Hey, what do you guys have? ” And that ends up working out great.
Ashley Kehr:
Did you get an introductory rate?
Tony Robinson:
I did, and it was like five point something. You have to put a certain amount on it to start with, but I’m like, “Yeah, I could probably swing that. ” And then it’s like five something I think for the first however long. So it’s pretty solid. All right guys, we’re going to take a quick break, but while we’re gone, if you have not yet, please subscribe to the Real Estate Rookie YouTube channel. So you can not only hear mine and Ashley’s voices, but see our lovely faces. You can find us at realestaterookie and we’ll be right back afterward from our show sponsors. All right, we’re back with Danielle. And now that you’ve gone through this refinance and you’re at this next phase of growth in your investing journey, what does the next version of Danielle as a real estate investor look like? And what are you intentionally doing differently this time as you go into your next deal?
Danielle Daly:
That’s a great question. And just to be completely transparent, I am not looking for a deal right now. I’m on a little bit of a pause from buying my next property, though I love real estate and absolutely plan to buy more, but I think I’m just transitioning from co-living. I want to kind of take a pause on that and potentially get into multifamily in the future or something that is not co-living. And I love co-living, so don’t get me wrong. Love it. It’s been fantastic.
Tony Robinson:
Let me ask that. Why shift away from that strategy if it’s worked well for you? Not necessarily co-living in the sense of co-living plus house hacking, but just strictly co-living. And the reason I ask- Renting by the room. Yeah, just renting by the room, because we actually have a lot of investors that we’ve interviewed who have leaned into that strategy. And I think about the Nassau’s in the Pacific Northwest who buy four bedrooms and turn them into eight bedrooms. There is, I think, a lot of momentum in that strategy. So what for you specifically is making you lean towards something else versus where you already have some experience?
Danielle Daly:
Yes. It’s a personal decision. Co-living is an amazing strategy. I absolutely make more cashflow objectively by renting by the room versus renting to a family. But I think Tony, you touched on most of the reason that I think I’m going to make a switch is that it’s becoming pretty saturated. A lot of people are in the market in this co-living, or a lot of people are doing this co-living strategy now. So it’s getting to the point where it’s a little bit saturated and really competitive on pricing to where you have to list rooms for a lot cheaper. So when I first, this is just a very basic example, but when I first listed my first property, I got about 950 per room. I, for that same house, am listing rooms for 850 or lower between eight, 850. So rent, I’m not saying rent has necessarily fully gone down as a whole in the Denver Metro, but specifically with house hacking, it’s just really competitive.
So rent is slightly reducing in multifamily and that pushes downward pressure on renting by the room to be a cheaper option. And then when you have more people doing that, you have to be more competitive in order to make your room stand out. So I think that’s why I wouldn’t necessarily want more, but I do continue or I do plan to continue maintaining my co-living properties as co-living strategies. I don’t plan to convert those yet because the numbers would not make sense. The second thing to note on co-living is if you are not self-managing, it is more expensive to hire a property manager. So call it anywhere between what? Is it 10 to 12% maybe to hire a typical property manager, call it ballpark, it would be closer to that 15 to 18% to do, or call it 15 to 16 or 17 I’ve seen on the high end, to manage a property that is co-living.
So I eventually would like to be hands-off. That is my next phase. My next version of Danielle is to be a little more hands-off with my properties. I’ve been so hands-on. I manage literally everything. So that is part of why I would want to not necessarily purchase more of those. I think that that would either, A, be more work for me, or two, it would be more money in taking out of my cashflow versus me just having a family in there and then having them pay utilities and having a property manager be a little bit cheaper. So that’s at least my thought process.
Ashley Kehr:
I think there’s a lesson in this story and is that you can build a strong foundation with something like you have with co-living, but then you also have to be flexible to pivot as the market changes, as your strategy changes. And I think that’s exactly what you’re doing. You know that this strategy has worked great for you, but it’s also time to pivot and not … And maybe even diversify a different market, a different strategy, things like that. And that’s such a great attribute to have is to recognizing when it is time to pivot and change your strategy into something else. But Danielle, before we wrap up here, you are self-managing, you have a full-time job. What tools are you using to help you manage these properties?
Danielle Daly:
So I only use a couple tools at the moment, but they’ve been absolute lifesavers. I work or I use Rent-Ready to kind of work through all my property management needs in terms of managing tenants, running background checks, applications. My tenants pay rent through there. It’s made it really, really simple for me. So love that tool. I also use Baseline, which is a newer tool. I just started using this actually. I hit the point where spreadsheets are just becoming complex and I now have a CPA and she does not like spreadsheets. It’s just something that it’s like, all right, let’s get a little more advanced here. Let’s make this a little more professional. So baseline is sort of like a banking tool where you could basically have a debit card for each of your houses to be able to transact and have everything be super organized for bookkeeping.
So I personally only use those two tools right now, but it’s been a total game changer because the organization is key and I was 100% working from a spreadsheet for the past three, over three years. So it’s been really helpful to start feeling like, okay, I’m running a business. I’m not just doing a little side thing with one house. And it’s mentally allowed me to be a little bit more hands off. Of course, I’m still managing the property when things come up, but having systems processes, tools that I’m using, it makes me feel like I’m running a business. So I think I’ve actually handled situations that occur with the houses in a more professional and business minded manner because of using these tools, if that makes sense. So yeah, those have been great for me.
Ashley Kehr:
And Danielle and I both love Baselane and me specifically their bookkeeping aspect. And if you are a pro member, you also get Baselane smart bookkeeping. So all you have to do is log into your BiggerPockets.com Pro account and you have access to these features and so many more as a Pro member. So you can go ahead and check this out at biggerpockets.com. Danielle, thank you so much for joining us today. Where can people reach out to you and find out more information?
Danielle Daly:
So feel free to reach out to me on LinkedIn. Just go ahead and look up my full name, Danielle Daly. You can also reach out to me on Instagram. It’s Danielle F. Daly, D-A-L-Y. Feel free to reach out. I would love to connect if you’re in the Denver metro area, but those are probably the best ways to reach out to me.
Ashley Kehr:
Well, thank you again for taking the time to join us and share your experience and also the refinance journey for yourself. I’m Ashley. He’s Tony, and we’ll see you guys on the next episode of Real Estate to Rookie.
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